Mortgage rate jump spooks homebuyers

Mortgage rates last week increased for the first time in a month and dinged demand on the jump.  

Redfin’s Homebuyer Demand Index fell 1 percent the previous week, according to a report from the brokerage. While that’s a marginal drop of the index — which measures requests for tours and other agent services — it’s the first drop in a month.

Another important barometer of demand, mortgage purchase applications, also fell 6 percent from the previous week. The softened demand comes on the heels of a lukewarm inflation report, which showed inflation easing slightly, but a slowing pace of economic recovery as well.

The average 30-year mortgage rate increased to 6.32 percent for the week ending on Feb. 16, the second straight week of gains. The daily average on Thursday alone was 6.75 percent, lower than its peak in November at 7 percent, but significantly higher than a year ago, before the Federal Reserve’s interest rate hikes.

The report was a “reminder that the housing-market recovery will remain touch-and-go until we see inflation and the overall economy improve for a longer duration,” Redfin researcher Chen Zhao said. 

The index is down 22 percent from last February, but looks more favorable than it did only a few months ago. Redfin’s demand index was 17 percent lower in the fall, when rates climbed over 7 percent. Pending home sales also look better on a year-over-year basis than they did in November though they’re still down 18 percent annually.

For the four-week period ending on Feb. 12, the median home sale price was up 1 percent year over year to $346,725. The median sale price was down in 20 of the 50 markets Redfin tracked, though it rose year-over-year in West Palm Beach, Miami and Fort Lauderdale, among others.

Only two markets notched annual increases in pending sales: Chicago (67.7 percent) and Cincinnati (30.2 percent). Months of supply also increased to 4.1, but new listings remain a problem, dropping 16.9 percent from last year. They fell in all 50 markets, including by a staggering 38.1 percent in Oakland.

Homes were on the market for a median of 51 days, up from 33 days last year.